Stern: Reversal is appropriate when Board's analysis of rating reduction is not complete.

Stern v. McDonough, docket no. 18-4425 (Apr. 20, 2021)

HELD: When the Board fails to conduct the complete analysis required by Brown v. Brown, 5 Vet.App. 413, 421 (1995), in evaluating the propriety of a rating reduction – even one that has been in effect for less than five years – the appropriate remedy is to reverse the Board’s decision and order the rating reinstated.

SUMMARY: Veteran was granted service connection for bilateral upper and lower extremity peripheral neuropathy was various ratings in 2007. He filed a request for increases in 2008 and the RO denied the increases. At VA’s request, he underwent an examination in 2010, and the RO proposed to reduce all his ratings to 10%. He challenged the proposed reductions, but the RO reduced the ratings in 2011. He appealed to the Board.

The Board first noted that his ratings had been in effect for less than five years, so he was not entitled to the protections of 38 C.F.R. § 3.344(a). The Board noted that in any reduction case, VA must determine whether the reduction was properly based on a finding that there was actual improvement and that such improvement would be maintained under the ordinary conditions of life and work. The Board then determined that the evidence showed actual improvement and concluded that the reductions were proper.

The appellant argued – and the Court agreed – that the Board failed to address the second part of the analysis when it “failed to consider the effects of his disabilities on the ordinary conditions of life and work,” in light of his statements regarding his ability to work. The Secretary argued that this is a reasons or bases error and that remand is appropriate, not reversal.

The Court first discussed VA regulations regarding reducing ratings, including the heightened procedural requirements of 38 C.F.R. § 3.344(a), which applies to ratings that have been in effect for five years or more. The Court noted that in Brown, it had held that other VA regulations – specifically 38 C.F.R. §§ 4.2 and 4.10 – say that VA cannot reduce any rating without first determining that “improvement in a disability actually occurred” and “that that improvement actually reflects an improvement in the veteran’s ability to function under the ordinary conditions of life and work.” In rating reduction cases, “the burden is on the Board ‘to establish, by a preponderance of the evidence … that a rating reduction was warranted.’”

In cases where VA has failed to comply with the required procedures for reducing a rating that has been in effect for more than five years, the Court has routinely reversed the improper rating reductions and ordered VA to reinstate the prior ratings. On the other hand, the Court has remanded other rating reduction cases for reasons-or-bases errors where the Board failed to address evidence or discuss the relevant regulations or where the Court questioned its own jurisdiction to address the matter. The Court also found no prejudice in a rating reduction that did not fully comply with the regulatory procedures the Board made findings to support its decision that the reduction was proper.

In this case, the Court found that reversal was the appropriate remedy – even though the heightened procedural requirements of 38 C.F.R. § 3.344(a) did not apply. The Court held that “the Board’s failure entirely to address, as required by Brown, whether the improvement in the disability reflects an improvement in the ability function under the ordinary conditions of life and work, also requires reversal of a rating reduction.” The Court stated that even though § 3.344(a) does not apply to this rating reduction, “Brown established that two factual findings must be made for a valid reduction of a non-protected disability rating: (1) actual improvement in the disability and (2) that improvement reflects ‘improvement in the ... ability to function under the ordinary conditions of life and work.’”

The Court declined to hold that all Board errors in reduction cases require reversal and reinstatement, noting that “the Court has in some circumstances concluded that a remedy other than reversal and reinstatement is appropriate even after identifying Board error.”